NJ Ethics Opinion Deems Sending Collection Letters as the Practice of Law

When a law firm uses its letterhead to collect debt for its client, it “cannot disclaim the fact that he or she is engaging in the practice of law when using law firm letterhead,” states a recent joint opinion by the New Jersey Committee on the Unauthorized Practice of Law and the Advisory Committee on Professional Ethics. 1

attorneys can participate in debt collection in any number of ways, without contravening the FDCPA, so long as their status as attorneys is not misleading. . . an attorney can, in fact, send a debt collection letter without being meaningfully involved as an attorney within the collection process, so long as that letter includes disclaimers that should make clear even to the “least sophisticated consumer” that the law firm or attorney sending the letter is not, at the time of the letter’s transmission, acting as an attorney.3

The Opinion rejects the Greco analysis and finds that “lawyers who send collection letters are engaged in the practice of law.” Therefore, “[a] lawyer cannot disclaim the fact that he or she is engaging in the practice of law when using law firm letterhead.” 4

Lawyers Sending Collection Letters Must Review Files and Exercise Professional Judgment to Comply with the RPC

The Opinion adds that lawyers may engage in “nonlegal or lay debt collection business,” but warns that a lawyer cannot operate a collection agency from within a law firm. 5 Thus, the sending of a collection letter on law firm letterhead without an attorney having “reviewed the file, made appropriate inquiry and exercised professional judgment” is the “incompetent and grossly negligent practice of law in violation of RPC 1.1(a).” 6

Sending Collection Letters Without Attorney Review Violates RPC

The Opinion concludes that lawyers must exercise their professional judgment in determining whether to send collection letters. Thus, an attorney who does not review files, “make appropriate inquiry” and exercise professional judgment, but permits non-attorney staff to send collection letters, “is assisting in the unauthorized practice of law in violation of RPC 5.5(a)(2) and engaging in deceitful conduct in violation of RPC 8.4(c).” 7

Impact on NJ Attorneys

The Opinion is binding on New Jersey Attorneys.8 Therefore, a New Jersey attorney’s use of a Greco disclaimer in law firm letterhead should be seen as the equivalent of a “Please Kick Me” sign placed on one’s back as it may lead to an inquiry by the Office of Attorney Ethics. Further, any attempt to engage in a “lay” collection agency that uses law firm letterhead would likewise be prohibited by RPC 1.1(a), 5.5(a)(2) and 8.4(c). New Jersey law firms organized as professional corporations, LLCs or similar structures may also run afoul of the New Jersey Professional Services Act, which prohibits most non-legal enterprises from operating from within a professional services law firm.9

New Jersey lawyers should also review the conduct of their firm’s practice and make certain they have measures in place which provide that attorneys shall comply with the professional standard announced in the Opinion. This necessarily includes a review of those measures designed to ensure non-attorney staff are compliant with the RPC.

Positive Implications For New Jersey Attorneys

While the Opinion makes reference to the Fair Debt Collection Practices Act (“FDCPA”) 10, it notes that the RPC and the FDCPA are “distinct bodies of law,” and rejects FDCPA cases permitting law firms to collect debt in a lay capacity.11 In doing so, the Opinion recognizes that the making and sending of a collection letter under law firm letterhead is the practice of law, and must be measured by whether the lawyer has fulfilled the “professional standards” of the RPC. 12

For New Jersey lawyers sending collection letters on law firm letterhead, the Opinion vitiates the Third Circuit’s decision in Lesher v. Law Office of Mitchell Kay. 13 The Lesher court found that a Greco-type disclaimer which appeared on the reverse of a collection letter was insufficient to disclaim attorney involvement in the making and sending of a collection letter. 14 Now, New Jersey lawyers sending collectionletters on law firm letterhead are, under the Opinion, deemed to be practicing law and cannot disclaim attorney involvement.

Under the New Jersey Constitution, the State Supreme Court has exclusive authority to adopt rules governing attorney conduct and their discipline. 15 The New Jersey Supreme Court’s power over the “practice of law is complete.” 16 It has exclusive authority to determine whether its attorneys have fulfilled their professional responsibilities. 17 This authority is not available to others court unless expressly delegated by the State’s Supreme Court. 18 Whether an attorney sending such a letter fulfilled their professional responsibility is an inquiry which can only be resolved by the New Jersey Supreme Court.19

Donald Maurice provides counsel to the financial services industry, successfully litigating matters in the state and federal courts in individual and class actions. He has argued before the Third and Eighth Circuit U.S. Courts of Appeals, and has represented the financial services industry before several courts including as counsel for amicus curiae before the United States Supreme Court. He counsels clients in regulatory actions before the CFPB, and other federal and state regulators and in the development and testing of debt collection compliance systems. Don is peer-rated AV by Martindale-Hubbell, the worldwide guide to lawyers. He has been recognized by Law & Politics Magazine as a New Jersey Super Lawyer, a Business Super Lawyer and a Corporate Counsel Super Lawyer. In addition to being a frequent speaker and author on consumer financial services law, he serves as legal counsel to DBA International and as chair of the ABA's Bankruptcy and Debt Collection Subcommittee. He is a fellow of the American College of Consumer Financial Services Lawyers and serves on the Governing Committee of the Conference on Consumer Finance Law .